The CEO behind last year's biggest US tech IPO explains the benefits of going public — besides the money

One of the biggest reasons a company goes public is to raise more
money.

But with so much private capital available in the VC market these
days, startups are increasingly delaying going public.

By doing so, they get to avoid the investor scrutiny or SEC
regulations public companies typically have to deal with. It also
allows them to stick to their long-term vision without having to
meet short term shareholder demands.

Conventional wisdom says it’s better to delay going public if the
money’s available elsewhere.

But that doesn’t mean to avoid IPOs at all cost. There are other
benefits to going public, aside from the massive cash infusion
companies see out of the gate. Just ask Lending Club, the online
credit marketplace that raised $870 million in its IPO last
December.

“Since the IPO, we’re seeing more awareness and credibility,”
Lending Club CEO Renaud Laplanche told Business Insider. “It’s
helped us with partnerships and recruiting.”

Laplanche says by going public — which was the largest US tech
IPO last year — Lending Club was able to get that public stamp of
approval, validating its business to people who may have had
concerns over the way it works.

That’s particularly important when you’re in a highly regulated
industry like finance, as Lending Club is.

“Large companies are more willing to partner with us, and we’re
less perceived as a startup, or a risk,” he says.

Since going public, Lending Club has been able to strike
partnership deals with Citibank and BankAlliance, a consortium of
200 community banks. It’s also signed deals with Google and
Alibaba to help their respective partners gain easier access to
credit through Lending Club’s platform. As a result, since its
inception, Lending Club originated more than $9 billion worth of
loans.

On the recruiting side, Laplanche says he’s getting access to
even better talent now. Risk-averse engineers prefer working at a
public company, especially since they can easily liquidate their
stock options. But even people who like startups have been
joining Lending Club because of its unique position in the
financial industry, where it’s still considered a “disrupter” to
massive incumbent banks. In the past quarter alone, more than 130
new employees have joined. “We’re still getting started, and
there’s a lot more to come than what has come so far,” Laplanche
says.

And big banks are taking notice too. In its
annual shareholders letter last month, JPMorgan Chase CEO
Jamie Dimon wrote, "There are hundreds of startups with a lot of
brains and money working on various alternatives to traditional
banking. The ones you read about most are in the lending
business…And we also are completely comfortable with partnering
where it makes sense."

Lending Club’s main value proposition is in its software that can
quickly vet borrowers’ creditworthiness at a fraction of the cost
traditional banks take. Its online platform significantly drops
the cost of finding and matching borrowers to investors, which is
why more and more banks are showing interest in partnering with
them. In fact, combining Lending Club’s low cost of operation to
the low cost of capital for banks would be a win-win situation
for both parties, Laplanche believes.

"The banks participating on the Lending Club platform delivers
the optimum solution because we have the lowest cost of
operations, while the banks have the lowest cost of capital," he
tells us. "The way we’re proposing to change the banking system
is not in a competitive, or confrontational way with incumbents.
We believe there’ll be more banks joining our marketplace."